Nespresso, Maggi, KitKat
Nestle with a stuttering start – boss promises an upswing
April 25, 2024, 5:55 p.m
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The Swiss food giant is starting the year weaker than expected. Sales are declining noticeably. Another important industry indicator is also disappointing. However, CEO Schneider promises stable performance for the rest of the year.
The food giant Nestle did not get off the ground in the new year either. The manufacturer’s sales of Nespresso, Maggi, KitKat and Perrier fell by almost six percent to 22.1 billion francs in the first quarter. The Swiss group announced that the unfavorable currency development had a particularly negative impact. But real internal growth, which includes sales volumes and changes in the product mix, which investors pay close attention to, also fell by two percent and thus missed expectations.
Despite significant price increases, the group from Vevey on Lake Geneva’s sales had already shrunk in 2023. But now Nestle wants to make product sales the engine of growth again. For the full year 2024, CEO Mark Schneider continues to expect organic sales growth of four percent. “We had expected a muted start and are now seeing a strong rebound in real internal growth in the second quarter and stable performance for the remainder of the year,” he explained. The numerous growth initiatives have already shown success.
But investors remained skeptical. The weak real internal growth is unlikely to reassure investors, explained Vontobel analyst Jean-Philippe Bertschy. The results of other industry representatives have recently improved.
The consumer goods industry has been imposing significantly higher prices on consumers for more than two years. The trend began with the Covid pandemic and was exacerbated by Russia’s invasion of Ukraine. Everything from sunflower oil to freight costs became more expensive. Consumers responded by switching to cheaper brands or private labels.